Author: Nancy, PANews

Stablecoins have become a hot topic in the global financial circle. The founder of a cross-border payment unicorn company has been "tired of questions" from investors and has directly criticized stablecoins.

Recently, a tweet from the CEO of Airwallex unexpectedly ignited the public opinion in the crypto community. In this statement, this traditional financial elite questioned the foreign exchange costs, clearing efficiency and actual application value of stablecoins in the mainstream market, and his words revealed his reservations and skepticism about this emerging payment tool.

Unexpectedly, this statement was quickly refuted by many parties in the crypto community. From the efficiency of on-chain settlement, to the payment freedom in emerging markets, to the compliance process of stablecoins, the comment area has become a scene of confrontation between the old and new payment systems.

This is not only a clash of opinions, but also reveals an accelerating reconstruction of the underlying logic of finance. Today, stablecoins are no longer marginal tools in the crypto world, but are actually entering the core scenarios of traditional finance, reshaping the cost structure and clearing mechanism, and shaking the vested interests of intermediaries.

Airwallex CEO publicly questioned the value of stablecoins and was "besieged" by many parties to refute

On June 8, Airwallex co-founder and CEO Jack Zhang publicly expressed deep doubts about the value of stablecoins.

"Investors always ask me about stablecoins and how they can reduce FX fees; but if you are sending money from USD to EUR and the recipient still needs to deposit it into a bank account in EUR, I don’t see any way stablecoins can reduce fees - because the withdrawal process from stablecoins to the target fiat currency is often more expensive than the FX rate in the traditional interbank market," Jack Zhang said in a tweet.

Jack Zhang further stated that he has never really understood the field of cryptocurrency. Compared with technologies such as AI, he has not seen a single practical use case for cryptocurrency in any aspect in the past 15 years. In his opinion, this pure financial product does not create any real value for society and is just a zero-sum game. Even if stablecoins are less volatile, he does not think it will be helpful for B2B transactions unless it involves some very niche currencies, and the liquidity of these currencies is extremely low.

Jack Zhang believes that in transactions between G10 currencies, the existing financial system (such as bank transfers) is efficient enough, with costs so low that it is almost free and real-time, and stablecoins are difficult to provide a more competitive solution. The cost of the off-exchange transaction from stablecoins to the recipient's currency is much higher than that of foreign exchange interbank transactions. Stablecoins may provide regulatory arbitrage opportunities in emerging markets such as Latin America or Africa, but their advantages are not obvious in mainstream currency transactions.

In response, Simon Taylor, strategy director of crypto compliance product platform Sardine, retorted that Jack's understanding of stablecoins is limited to surface fee comparisons and ignores their fundamental significance. The value of stablecoins does not lie in reducing the cost of off-ramping or the last mile. Stablecoins are not just cheaper, but better. For now, stablecoins are not a major change in financial infrastructure, but just another option. He believes that the upcoming US regulation will be a turning point for stablecoins as a financial track.

Richard Liu, co-founder of Huma Finance, emphasized that stablecoins really can't help much from the perspective of optimizing existing foreign exchange flows. But he pointed out incisively, "Don't fool yourself into thinking that you have pushed foreign exchange costs to the limit. Your customers are still suffering from high fees and barriers to entry, and these problems are rooted in the system you rely on itself - an old and predatory banking infrastructure. Blockbuster once thought that its cost structure was optimized enough, but its business model was built on the wrong foundation: logistics and transportation. We all know the ending of that story. Stablecoins will drive the next wave of global payments. It is not a fine-tuning of the traditional financial track, but a new paradigm built on a completely different architecture. Its rise does not rely on the participation of existing institutions, including Airwallex."

Matt Sorg, technical director of the Solana Foundation, shared the progress of stablecoins in practical applications. He said that some euro stablecoins are now being gradually adopted. It only takes a few basis points of fees on the chain to switch from US dollar stablecoins to euro stablecoins. Stablecoin issuers are establishing low-cost channels from euro stablecoins to fiat bank accounts. Although there are still some expensive intermediaries in this process, there are actually cheap ones as long as you know who to look for. In essence, there are different participants in each link to solve the cost problem.

"You can do this by issuing your own stablecoin. The income from stablecoins is enough for you to easily subsidize zero-fee deposit and withdrawal services while earning extra profits. In addition, the crypto economy has essentially formed a parallel system. Once the dollar is in digital form, you can use and consume it more and more widely in the crypto field. Many merchants are actually happy to accept USDC or USDT. In the end, you don't even need to exchange it back to fiat currency. And the transaction fees in this parallel system are also lower." Helio co-founder and CEO Stijn Paumen suggested.

Helio CEO Mert also shared his personal experience, saying that the bad experience of using Airwallex API for cross-border transfers in his early years prompted him to invest in cryptocurrencies, indirectly supporting the potential of stablecoins as an alternative.

“When we offer an annualized 4% stablecoin return (risk-free), users will have less and less motivation to convert their funds back to fiat currency. This will push up demand for the US dollar and weaken demand for the euro. The more the euro depreciates, the more people will tend to hold US dollars - eventually forming a downward spiral until everyone chooses to use only US dollars. In the end, the euro will just become something Europeans have to buy in order to pay taxes.” Mike Belshe, CEO of crypto custody platform BitGo, believes that stablecoins have brought about an enhanced effect on the US dollar hegemony.

Nic Carter, founding partner of Castle Island Ventures, directly criticized Jack for his superficial understanding of stablecoins and his lack of basic curiosity and understanding.

Under the full-scale siege of the crypto community, Jack Zhang responded that stablecoin wallets can be used as an alternative means of payment and increase liquidity in emerging markets. It does have a place in the financial market, but he does not think it is disruptive at any level.

From the regulatory edge to the mainstream stage, the traditional financial "cheese" is disappearing

Jack Zhang's doubts actually reflect the general confusion and instinctive vigilance of traditional financial practitioners towards the crypto world. In their view, stablecoins are neither currencies in the traditional sense nor can they be classified as clear assets. They are more like an intermediate tool that walks on the edge of regulation. However, this seemingly marginalized financial tool is accelerating into the mainstream financial field, and even beginning to shake the "cheese" on which the traditional financial system depends for survival.

As we all know, the core value of stablecoins is not only their price anchoring mechanism, but more importantly, the financial structural changes they trigger. Not only does it have the characteristics of instant on-chain settlement, global circulation, and programming logic support, it also naturally embeds a dimensionality reduction attack on the existing financial "account-bank-clearing network" system.

From the perspective of cross-border payments, we can clearly see the impact of stablecoins on the old system. In the traditional financial system, cross-border remittances need to go through multinational banking systems, clearing networks and foreign exchange markets, which often takes several days, is expensive and has opaque information. Stablecoins, on the other hand, achieve real-time arrival and full-chain transparency through on-chain point-to-point transfers and smart contract clearing. This is not only an improvement in efficiency, but also a paradigm shift: funds no longer rely on a banking network backed by national sovereignty, but are directly managed and transferred through on-chain addresses in an open network.

More importantly, stablecoins break the geographical limitations and barriers to financial services. Due to the compliance costs, risk control restrictions and commercial feasibility of traditional banks, more than 1 billion people in the world still cannot access financial services. Stablecoins, through the combination of "smartphone + digital wallet + Internet", allow users to obtain the right to store value, make payments, cross-border transactions and participate in global financial activities, thus achieving truly decentralized financial inclusion. For example, in Latin America, Africa, Southeast Asia and other places, more and more users are beginning to use USDT and USDC for daily storage, salary settlement, commodity payment and small cross-border remittances. This is not what Jack calls "regulatory arbitrage", but a true portrayal of a new financial order taking root in marginal areas.

It is for this reason that the impact of stablecoins on traditional financial technology companies is fundamental.

Take Airwallex as an example. Its business model is based on the logic of connecting to the existing financial network, and constructs payment paths through bank accounts, Swift network, clearing houses and foreign exchange markets. Stablecoins bypass this network logic and break the business structure that relies on bank accounts, clearing houses and exchange networks from the source. This means that stablecoins are gradually squeezing the profit margins of Fintech companies, and once the global compliance system of stablecoins is improved, this impact will become systemic and irreversible.

At the same time, the global compliance trend of stablecoins is gradually making them legal competitors in the traditional financial field. The United States, Hong Kong, Singapore, and the United Arab Emirates are all accelerating the formulation of stablecoin regulatory standards. For example, the United States is promoting the US Stablecoin GENIUS Act to put stablecoins on the track of formalization; Hong Kong's "Stablecoin Ordinance" will take effect on August 1, becoming a milestone in promoting the sustainable development of Hong Kong's stablecoin and digital asset ecosystem. In this process, crypto-compliant native companies such as Circle have taken the first-mover advantage, while traditional institutions are slow to act due to the rigid internal structure and lack of technology.

What is more noteworthy is that the core user group of stablecoins is rapidly getting younger. Generation Z and millennials grew up in a digital native environment and have a natural acceptance and affinity for on-chain wallets, stablecoin payments, and smart contract operations. This native digital behavior habit is increasingly eroding the moat of these institutions.

However, more and more traditional financial and technology giants are actively embracing stablecoins. For example, Deutsche Bank is currently studying stablecoins and tokenized deposits, and is considering issuing tokens or joining industry initiatives; large technology companies such as Apple, X and Airbnb are in contact with crypto companies to explore stablecoin payment integration solutions; Uber is considering using stablecoins to reduce cross-border payment costs and is actively evaluating its application potential; payment company Stripe is considering working with banks to promote the development of stablecoin payments; Spain's Santander Bank plans to launch stablecoins and expand cryptocurrency services... These market dynamics also show that stablecoins may become the core variable in a new round of financial structure reshaping.

In general, the debate triggered by Airwallex's questioning of stablecoins shows the increasingly fierce competition and ideological collision between traditional finance and crypto finance. It cannot be ignored that with the advancement of compliance and the active testing of mainstream institutions, stablecoins are gradually evolving from marginal tools to an important force in mainstream finance.